5-12-50. Establishment of special purpose corporation--Limitations--Board membership--Powers of corporation. The authority may establish by resolution a special purpose corporation which shall be body corporate and politic and instrumentality of, but having a legal existence independent and separate from, the State of South Dakota and the authority. The corporation shall be established for the express limited public purposes set forth in §§ 5-12-48 to 5-12-59, inclusive, and no part of the net earnings of the corporation shall inure to any private individual.

The corporation shall be governed by a board consisting of the members of the authority and two additional persons appointed by the Governor, which two additional members shall be independent from the state. The resolution establishing the corporation shall serve as the charter of the corporation and may be amended from time to time by the authority, but the resolution shall at all times provide that the power and the authority of the corporation shall be subject to the terms, conditions, and limitations of §§ 5-12-48 to 5-12-59, inclusive, and any applicable covenants or agreements of the corporation in any indenture or other agreement relating to any then outstanding bonds. The corporation may enter into contracts regarding any matter connected with any corporate purpose within the objects and purposes of §§ 5-12-48 to 5-12-59, inclusive.

The authority and corporation may delegate by resolution to one or more officers or employees of the authority or corporation such powers and duties as it may deem proper.

The corporation may issue bonds and secure repayment of the bonds with amounts payable out of tobacco settlement revenues or any other property or funds of the corporation. Bonds issued by the corporation shall be accompanied by an opinion of nationally recognized bond counsel substantially to the effect that the bonds are valid and legal obligations of the corporation.

The corporation may pledge as security for any bonds any rights under the master settlement agreement held by the corporation, including the right to receive or collect tobacco settlement revenues, moneys, or other funds deposited with, payable to or held by or on behalf of the corporation, and the proceeds of the foregoing and any proceeds of bonds. Any right of the state to the residual interest in tobacco settlement revenues shall be, in all respects, junior and subordinate to any such pledge if and to the extent so provided by the terms of any instrument or agreement described in 5-12-49 and signed on behalf of the state by the Governor. Any such pledge made by the corporation shall be valid and binding from the time the pledge is made. The property, revenues, moneys, and other funds so pledged and thereafter held or received by or on behalf of the corporation shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act; and, subject only to the provisions of prior pledges or agreements of the corporation, the lien of the pledge shall be valid and binding as against the state and all parties having claims of any kind in tort, contract, or otherwise against the corporation irrespective of whether such parties have notice thereof. No ordinance, resolution, trust agreement, or other instrument by which such pledge is created need be filed or recorded except in the records of the corporation.

In connection with the issuance of bonds or, at any time with respect to bonds, the corporation may enter into arrangements to provide additional security and liquidity for bonds. The arrangements may include, without limitation, bond insurance, letters of credit, and lines of credit by which the corporation may borrow funds to pay or redeem its bonds and purchase or remarketing arrangements for assuring the ability of owners of the bonds to sell or have redeemed their bonds. The corporation may enter into contracts and may agree to pay fees to persons providing the arrangements, including from bond proceeds.

The resolution authorizing the issuance of bonds or the indenture or other agreement approved by the resolution may provide that interest rates may vary from time to time depending upon criteria established by the corporation, which may include, without limitation, a variation in interest rates as may be necessary to cause bonds to be remarketable from time to time at a price equal to their principal amount, and may provide for appointment of a national banking association, bank, trust company, investment banking firm, or other financial institution to serve as a remarketing agent in that connection. The indenture or other agreement with respect to bonds may provide that alternative interest rates or provisions will apply during such times as bonds are held by a person providing a letter of credit or other credit enhancement arrangement for bonds.

In connection with bonds under §§ 5-12-48 to 5-12-59, inclusive, or the investment of proceeds, bonds, or other funds of the corporation, the corporation may enter into contracts that it determines necessary or appropriate to permit it to manage payment or interest rate risk. These contracts may include, but are not limited to, interest rate exchange agreements; contracts providing for payment or receipt of funds based on levels of or changes in interest rates; contracts to exchange cash flows or series of payments; and contracts incorporating interest rate caps, collars, floors, or locks.

The corporation may not file a voluntary petition under or be or become a debtor or bankrupt under the federal bankruptcy code or any other federal or state bankruptcy, insolvency, or moratorium law or statute as may, from time to time, be in effect and neither any public officer nor any organization, entity, or other person shall authorize the corporation to be or become a debtor or bankrupt under the federal bankruptcy code or any other federal or state bankruptcy, insolvency, or moratorium law or statute, as may, from time to time be in effect.

The corporation may not guarantee the debts of another.

The corporation may not be required to file any reports with the state other than those required to be filed with the Legislature by authorities which issue bonds.

Except for debts incurred directly by the corporation, no indebtedness, bonds, or obligation, issued, incurred, or created by the State of South Dakota or any state agency or instrumentality may be or become a lien, charge, or liability against the corporation or the property or funds of the corporation.

Source: SL 2001, ch 27, § 3; SL 2002, ch 31, § 2.